Microsoft Antitrust Paper

According to the Department of Justice, Microsoft used its resources and technology to drive other companies out of business, thereby eliminating the competition and creating a monopoly. Without competition, Microsoft was able to set prices and consumer conditions in a way that exceedingly benefited the company while ensuring a decreased amount of new competition because of the proprietary software installed in most PCs. (Competitive Processes, Anticompetitive Practices and Consumer Harm in the Software

Microsoft has developed into an inescapable force within the technological field. Coming from a delayed humble beginning, it has had to devote large sums of money to approach the levels of the founding technological companies. Today, Microsoft controls the market in computer software. How they have achieved this status is what some have come to question. Through “bundling” software programs, manipulating other computer companies, and packaging deals with personal computers, Microsoft has managed to eradicate nearly all competitors in the computer software market (Love, 1997). This near monopoly affects the entire spectrum of classes, including the consumer, other networking providers,

Windows, a program that was created in 1983, but did not change the market significantly until 1990, has grown to control 94.1% of the operating system market (Newman). This has required other companies in the software industry to make all of their applications Windows compatible. Critics claim that Microsoft systematically eliminated all competition of other operating systems and software manufacturers. Microsoft also controls a large part of the software industry. According to sales from April 2002, Microsoft sold 89% of office software to consumers (Washington Post). Microsoft bundles these applications with the Windows operating system, which is, according to them, an effective technique. Critics assert that this forces other makers of office software, like Corel, to lose business, because consumers will not buy another application if one is already pre-installed. Critics point to the proposed 1995 merger between Microsoft and Inuit which ultimately failed. Inuit is the maker of the best-selling money management

The war between Microsoft and the Department of Justice actually began with the rollout of Windows 95. In an attempt to gain a greater market share of the Internet browser arena, Microsoft began packaging Internet Explorer as part of their Windows operating system. Microsoft required their original equipment manufacturing (OEM) companies to install Microsoft Internet Explorer and Microsoft Networking software on every personal computer they sold along with icons for each application prominently displayed on the user's desktop.

No matter who wins, the case almost certainly will be appealed, probably all the way to the Supreme Court. If the government wins at the trial court, it has already specified that it wants Microsoft to cancel contracts deemed exclusionary. In addition, the government wants Microsoft either to strip out its Internet browsing technology from Windows 98 or to include a rival browser made by Netscape Communications Corp. The government also indicated in October that, should it win, it would seek an additional hearing where it would suggest additional sanctions that should be placed

First, Microsoft ‘encouraged’ Compaq, Apple, and other computer manufacturers to promote only Internet Explorer, and to make that the default browser on their PC. This encouragement came in the way of threats to eliminate or delay licensing of operating systems, providing the browser for free to internet access providers, and bundling the software with the operating system under the guise of interactive ease for the consumer. This manipulation led to an increase in the browser’s sales by 45 to 50%, which paralleled the decline Netscape experienced in their market sales in 1998.6

In 1994, Microsoft Corporation was sued by the Department of Justice on behalf of the United States for violating §2 of the Sherman Act “…by engaging in monopolization through a series of exclusionary and anticompetitive acts designed to maintain its monopoly power” (Mallor, Barnes, Bowers, & Langvardt, 2010, p. 1275, para 3). More specifically, the company was charged with, among other things, violating the Act by 1) attempting to monopolize the Web browser market, 2) tying its Internet Explorer (IE) browser application to its Windows operating

The purpose of antitrust laws is to both promote and protect competition. They aren’t designed to go after big companies simply because they are bigger or more successful than others in their industry. They aren’t anti-market or anti-business. They are intended to be just the opposite, in fact. They are meant to promote successful market economics through the assurance of healthy competition while keeping abuses of the system in check that could overrun the market.

The PCs became a commodity. Microsoft grew to be the leader in the operating system market continuing to develop their Windows GUI line. With Windows, software standards have been established allowing software developers to certify their products to meet Windows requirements and deliver controlled performance. In addition, the PCs allowed numerous hardware manufacturers to

“Microsoft’s share of the market for Intel-compatible PC operating systems is extremely large and stable,” 2. “Microsoft’s dominant market share is protected by a high barrier of entry,” 3. “Microsoft’s

Microsoft is a highly diversified company. Its technologically-related products span from software to music players to game consoles to web browsers to search engines to phones. However, its flagship product, the product which has been the primary driver of its profits has been Microsoft Windows, the ubiquitous operating system that runs on virtually every computer in the world. Windows has been deemed so critical that even Microsoft's competitor Apple was effectively forced by market pressures to allow its Macs to run Windows, in an effort to boost sales. "As astounding as Apple's success has been, it hasn't put a dent in the Microsoft Office monopoly. [Current CEO] Ballmer and company still profit on every Macbook running Word, Excel and PowerPoint" (Greg 2012).But while Microsoft continues to make its highly profitable Windows products (despite industry criticism about its user features); it has struggled to diversify in its many critical areas, most notable in its music, phones, and Internet service.

Microsoft, a company founded by Bill Gates has, in the last couple of years seen a number of changes in its mode of operation. Traditionally Microsoft has been in the business of producing computer-based products exclusively (Byrnes, 2010). In the light of changing technology, globalisation and changing consumer tastes and preferences change has become in the tech-giant company. In the fast-paced world of technology, consumers are actively switching to the new touchscreen laptops and tablets, which are the replacement to conventional computers. These contemporary computers require operating systems and software that are entirely different from what was in use formerly. As means of keeping up this trend, and in order to address these new

Microsoft and its supporter’s claims that they are not breaking any laws, and are just

The patterns I see with Microsoft’s reactions to competition is that they rely heavily on the fact that they are leaders in the field of operating systems and they use this monopoly as leverage on what they give out to their consumers with their “bundling capabilities” (Rivkin 4). In the past I believe they have been successful against competitors even though they have gotten into legal trouble while doing it. This is because even after the law suits they still remained ahead of the pack in market shares.

Considering that every computer manufactured in the United States and the world has to have an operating system in order to work Microsoft appears to be dominant in this arena. The company has been so dominant over the years that back in 1998 in a complaint filed against Microsoft in the U.S. District Court of the District of Columbia on May 18, 1998, the Justice Department declares unequivocally that "Microsoft possesses (and for several years has possessed) monopoly power in the market for personal computer operating systems" (U.S. v. Microsoft Corporation 1998).